15.1.1 Establishment of Biomass Towns

Over the last decade, the government of Japan has made efforts to promote biomass utilization in a local society under the Biomass Nippon Strategy (BNS) that was enacted in 2002 and revised in 2006. The BNS stipulates that biomass utilization should be promoted in the following five directions: (i) fostering public understanding; (ii) developing a system to use biomass comprehensively (e.g. in the form of biorefineries); (iii) coordinating stakeholders (national government, local municipalities, suppliers, and consumers) to share burden and responsibility; (iv) adjusting competitive conditions (carefully supporting biomass businesses at their inceptions); and (v) considering an international perspective (e.g. the use of clean development mechanisms or joint implementation).

Related to (iii) above, the role of local municipalities is emphasized as a principal coordinating agent to realize local energy produced for local consumption through the establishment of biomass towns. When the local biomass plan submitted by a municipality is approved by central government, the municipality is certified as a biomass town. In general, a biomass town contains various components for energy use (e.g. biofuel production, power or heat generation) and material use (e.g. organic fertilizer, livestock feed, construction material, bioplastics, charcoal, other chemical materials) while meeting a design requirement of utilizing more than 90% of waste biomass and more than 40% of unused biomass in terms of carbon equivalent. The biomass town is expected to create various biomass-based industries and jobs in the neighboring region to achieve comprehensive (or “cascade” or “circular”) use of biomass.

15.1.2 Features of Biomass Town Plans

Major features of biomass town plans can be derived from the data set of 318 certificated biomass towns available online at the website of the Japan Organics Recycling Association (JORA, 2012). Note that all the data compiled by the JORA are based on biomass town plans; thus, the data illustrate the planned but not necessarily the implemented biomass utilization in each biomass town. The data set contains the general information summarized below.

First, biomass resources devoted to practical use are mostly waste and presently unused biomass. In particular, animal wastes are used in 297 towns (93.4%), followed by agricultural residues (296 towns; 93.0%), rice straw and husk (275 towns; 86.5%), forest wastes (263 towns; 82.7%), and sewage sludge (260 towns; 81.8%). These data reflect the design requirement for the target use rate of over 90% for waste biomass and over 40% for unused biomass. Second, biomass is more commonly used as raw material for products than for energy; main end-use products are fertilizer/compost (318 towns; 100.0%) and animal feed (230 towns; 72.3%) as compared with biodiesel fuel (BDF; 257 towns; 80.8%), solid biofuels in the form of wood pellets (251 towns; 78.9%), and biogas (178 towns; 56.0%). Third, every biomass town combines use of multiple types of biomass resources (feedstocks) to produce various types of end-use products. The average number of feedstock types per town is 8.6, which is composed of 5.7 for waste biomass, 2.6 for unused biomass, and 0.2 for resource (dedicated energy) crops. The average number of end-use products per town is 5.6, which is composed of 2.3 for material use and 3.3 for energy use. Fourth, the pattern of biomass use is location specific, subject to biomass resource availability in type and volume. Based on the principle of “local use of locally available biomass resources”, the supply chain that consists of the procurement of feedstocks as well as the production and distribution of end-use products is formed within a municipal boundary and adjunct areas. A biomass town in remote areas is more likely to use forest waste and agricultural residues whereas a biomass town located in or near urban areas is more likely to use industrial and household solid wastes. For example, using forest waste is concentrated in mesomountainous and mountainous areas, and recycled cooking oil is more frequently seen in urban areas. However, use of animal waste is noted to be widespread throughout the country regardless of whether a local biomass town is urban or rural.

One profound phenomenon of the location-specific characteristics, related to the characteristic of the combined use of multiple feedstocks for multiple products, is that biomass towns in or near urban areas are more diversified in both used feedstocks and end-use products than those in remote areas. Areas of higher population density have advantages in diversification of biomass utilization due to easier access to a variety of biomass feedstocks and to end users.

The JORA data also show that only 25.2% of the biomass town (80 towns) have attempted to utilize biomass to produce liquid fuel. Cereal crops and sugar cane are used for ethanol production on experimental trials; the feedstocks with negligible market values including broken rice, wheat of unacceptable quality in markets, and residues from sugar processing have been used. For example, broken rice is more than five times cheaper than standard-quality rice. The BDF produced from oil crops such as rapeseed or sunflower is more popular than ethanol production. However, BDF is not directly produced from raw rapeseed harvests that can be processed for high-quality cooking oil. The feedstock of BDF comes from recycled oil collected from food industries and households. BDF has been produced on a small scale in some integrated local biomass recycling systems from rapeseed or sunflower that is sown as an alternative crop in deserted or unused paddy fields as guided by the national policy of rice production adjustment. The local resource recycling system uses resources available locally at recycling centers as its core to involve various types of stakeholders, i.e. farmers, manufacturers, consumers, and local government staff. Moreover, in this localized system, various activities are undertaken that include using rapeseed/sunflower flower fields as tourist attractions, producing multiple processed products such as cooking oil, fertilizer, animal feed and BDF, and collecting recycled oil and other types of household wastes.

In summary, the most common patterns of biomass utilization for a local society in Japan are characterized by (i) production of fertilizer (compost) through conversion from animal waste, sewage sludge, and rice straw or husks; (ii) production of animal feed from leftover food; (iii) production of BDF from recycled cooking oil; and (iv) production of wood pellets from timber waste and forest residues. Most biomass towns have been designed based on the combination of the four patterns, i.e. combination of (ii) and (iii) in or near urban areas, and combination of (i) and (iv) in mesomountainous or mountainous areas. Presently, bioethanol production from resource crops is limited due to lower economic return to investment. Indeed, bioethanol production is still in the trial stage and requires a set of new technologies through a series of production stages from the development of high-yielding inedible biomass crops to be converted into ethanol.

15.1.3 Unsuccessful Performance of Biomass Town Plans

The BNS has led to the development of biomass town plans in more than 300 municipalities; however, their performance has been less than satisfactory. Due to the budget-tightening initiative and the relatively poor performance of biomass-related projects, the government put an end to applications for new biomass towns in April, 2012, when the number of biomass towns had reached 318. The Administrative Evaluation Bureau (AEB) evaluated biomass use projects in February 2011 (AEB, 2011), and the findings are summarized as follows. First, basic conditions for using biomass have been developed in general, as indicated by the increase in the number of biomass-related facilities. Second, however, the data that should have been recorded are limited by (i) the costs of projects, (ii) the outcomes of related businesses, (iii) the progress of biomass town plans, and (iv) the achieved reduction of GHG emissions. Third, the performance of biomass-related projects was much lower than expected. For example, 43% (92 of 214) of biomass-related projects surveyed in 136 biomass towns did not have proper accounting records, with only 16.4% (35 projects) having achieved some outcomes. Of 785 components included in the initial plans, only 277 components (35.3%) had been undertaken, whereas 221 components (28.2%) had already been abandoned or were unlikely to be implemented. Moreover, reductions of GHG emissions were calculated by only three facilities, and only 10.4% of facilities had reduced GHG emissions.

The available literature (e.g. Tomari, 2012) and other information from various sources have led to the following reasons for such unsatisfactory performance of biomass town plans. First, the lack of rural infrastructure such as roads made it difficult to collect biomass resources and transport them to centralized conversion facilities. For example, a biomass town located in a mesomountainous or mountainous area initially aimed at utilizing forestry waste in the form of wood pellets failed to meet the objective due to the inadequate forestry road network. Second, initial plans are too ambitious; they are characterized by a lack of feasibility as regards the technical, economic, and managerial aspects. An installation of sophisticated facilities based on advanced technology was designed, but they are not sustainable in operation without outside subsidies. Less attention was given to financial, managerial, marketing, and other considerations and conditions, as well as the capacity of the municipal government involved during the planning stage. Third, various projects involving biomass town plans have been undertaken rather independently without horizontal linkages, whereas system evaluations of the projects as a whole had not been prepared. Fourth, related to the third point, a coordination failure occurred at various stakeholder levels among various administrative offices, i.e. municipal government, and liaison between municipal government and the private sector or non-profit organizations involved. Fifth, the generation of new biomass-based industries has been hindered by the current legislative framework. For instance, energy-related regulations have been established, originally with little attention to the supply of gas or electricity by farmers or households so that their entry into energy markets cannot be initiated legally.

These reasons are associated with lack of profitability as well as inadequate provisions of the legislative and institutional framework that have been mentioned as the major bottlenecks to constructing effective biomass systems in Chapter 2. These two factors will be addressed in the next two sections by discussing the current situation and future challenges to implementing localized utilization of renewable energy, including bioenergy, through case studies for two biomass towns: Kuzumaki town and Higashiomi city. Both municipalities have been regarded as advanced in undertaking local environmental and energy programs in Japan; they had autonomously promoted producing biomass energy utilization using locally available resources before the BNS was enacted in 2002. With emphases on the legislative and institutional aspects, the study on Kuzumaki attempts to identify issues for improving local energy self-sufficiency. With the focus on the economic aspect, the study on Higashiomi examines the profitability of rapeseed used for BDF production via cooking oil within the city’s resource circulation cycle.

15.2.1 Overview of Kuzumaki

Kuzumaki town is located in a mountainous area in the northern part of Iwate prefecture that is located in the northern part of East Japan. Specifically, Kuzumaki is located between the city of Morioka, the capital city of Iwate, and the Kitasanriku area with the 40th parallel running through the center of the town (Figures 15.1 and 15.2). Kuzumaki is a key trading area that connects the coastal areas of the Pacific and inland areas. The importance of this area as the route for material supplies connecting the Pacific coastal areas and inland areas was recognized during the East Japan Earthquake on March 11, 2011.

The population of Kuzumaki is 7417 with 2877 households as of April 1, 2011 in an area of 434.99 km². Forests account for 86% of the area, and 95% of the land is located over 400 m above sea level. The annual average temperature is about 8°C. Kuzumaki is characterized by a typical mesomountainous region or mountainous area.

The main industries are dairy farming and forestry. About 11,000 cattle are raised, including 10,000 dairy cattle and about 1000 beef cattle. Milk production is about 40,000 tons a year (about 110 tons per day). Kuzumaki is known in Japan as the largest dairy farming town in the Tohoku region. Forestry, another main industry, is also very active; laminated Japanese larch trees are shipped out as construction materials. Charcoal manufacture is also a traditional industry with skills to produce high-quality charcoal passed on through generations. Wine production using wild crimson glory vines has also started in recent years. The annual gross agricultural output from these main industries is estimated to be about 4.9 billion yen.

Kuzumaki is viewed as a unique town due to its municipal strategy for managing energy and the environment. While calling itself a town with milk, wine and clean energy, Kuzumaki was also declared as a new energy town in 1999. Although the current municipal policy may be seen as conventional like those implemented in other small municipalities in Japan, Kuzumaki is distinct from other municipalities in that it has a longer history of dealing with local energy and environmental issues. “The policy to protect the environment” had been presented by Kuzumaki long before the national new energy policy was established in the 2000s. The town’s unfavorable geographic and topographic conditions were considered as the motivation for the municipal government to tackle energy and environmental issues more seriously than governments of other municipalities with more favorable natural conditions. With a less favorable infrastructure such as electricity distribution systems, mitigating local energy and environmental problems is imperative to sustain the town’s main industries and to ensure energy security for its residents.

In fact, Kuzumaki has been working on local energy production and consumption to deal with local energy problems. One such effort is to reduce the consumption of conventional electric energy and energies produced from fossil fuel such as oil and natural gas. Second, Kuzumaki has been promoting the use of new energies, such as wind power generation, photovoltaic power generation, and woody biomass by industries operating within the town boundaries. These activities underlie the fact that the residents are highly motivated to improve their environment, which seems to be working as an incentive for the town hall, the administrative body of the town, the town council, and the legislative body to make their best efforts to develop the town’s policies to reflect the feelings of the residents.

The remainder of this section explores the current situation and challenges for localizing energy utilization based on interviewing the town hall of Kuzumaki and the manufacturers of woody biomass or other renewable energy located in Kuzumaki, supplemented by information collected from various sources.

15.2.2 Electric Energy

A system for local production and consumption of electric energy based on photovoltaic and wind power generation facilities was developed after fiscal year 2003. However, the Electricity Business Act stipulates that public power supply companies have an exclusive right to run the business for transmitting electricity to private households. Therefore, electric energy cannot be considered as strictly locally produced and manufactured in terms of actual values. As shown in Table 15.1, however, values of local energy production and consumption can be calculated theoretically. The breakdown shows that while the nominal self-sufficiency rate was less than 100% in the fiscal year 2003, its rates have remained greater than 100% since the fiscal year 2004. The interview-based investigations reveal that these rates remained over 100% in the fiscal years 2009 and 2010 as well.

However, some people in the town think that they have not been experiencing the effects of the established local production and consumption of electric energy. One reason is that the current Electricity Business Act stipulates that the supply of electricity is the exclusive preserve of public power supply companies. In addition, the Act also stipulates that the nominal self-sufficiency rate must not be reflected in the price of purchasing electricity in a town because the price of electricity is regulated by the national government. Thus, the residents of Kuzumaki, the town council, and the town hall are starting to form a common recognition that the necessity to separate power generation and power transmission is the most important issue to be considered for developing future electric energy policy.

An event that further solidified this recognition was the 4-day blackout of the entire town of Kuzumaki after the onset of the East Japan Earthquake on March 11, 2011. The initial understanding among the people was that no blackout would occur, or the power supply would be quickly restored even if a blackout occurred because the power generation facilities located in the town were still generating electricity. However, in reality, they experienced a blackout that lasted 4 days. After such an unpleasant experience, the people in Kuzumaki have further strengthened their awareness of the necessity to separate power generation and power transmission, although the idea had been advocated long before the earthquake.

15.2.3 Gas and Solid Fuel Energy

The local production and consumption of gas and solid fuel energy in Kuzumaki are based on the use of woody biomass. Specific products from woody biomass include fuel woods, charcoal, chips, and pellets. Unlike electric energy, the amount of woody biomass energy produced and consumed locally is negative, as shown in Table 15.2. That is, the town is receiving a negative amount from outside communities. The self-sufficiency rate, however, is slightly over 100% because some fuel woods, chips, and pellets produced are consumed within the town boundaries.

However, a large portion of the total amount of charcoal produced from woody biomass in the town is shipped out of the town. This is because the people of Kuzumaki profit more economically by selling charcoal to other communities than by using the charcoal as an energy source in their own town.

Different researchers have evaluated this situation in a variety of ways based on their perspectives. The perspective of regional development, as suggested by the name “Regional development and use of biomass”, states that the role of woody biomass is extremely effective in this case. On the other hand, from the perspective of local production and consumption of energy, the role of woody biomass in this case is extremely small. Resolving the differences between these two perspectives becomes a difficult problem when interpreting the numerous problems that various regions around Japan are facing.

When an area is located in either a mesomountainous or a mountainous region with only forestry-based industries, as is the case for Kuzumaki, the thoughtless introduction of new technology may result in unnecessary loss of the forestry or forestry-related industry in the area. If this were to occur, it would mean the loss of the town. Therefore, the current practice to use woody biomass in Kuzumaki should be considered very effective in terms of regional development.

Given the energy outlook for the future, a concept based on the perspective of local consumption of energy produced locally is necessary to achieve this goal. However, thoughtless introduction of new technologies may result in the loss of the town, as discussed in previous paragraphs. Therefore, we need to prioritize newly created strategies to promote beneficial and cost-effective uses of woody biomass to take advantages of the natural resources of Kuzumaki while avoiding the problems caused by practicing ideas without careful consideration and evaluation beforehand.

15.2.4 Issues and Outlook

One problem faced by Kuzumaki in undertaking energy-related programs is the diverse opinions expressed by local residents. As mentioned earlier, the residents of Kuzumaki are highly motivated to improve the local environment, which is an incentive for the town’s administrative offices to make efforts to include the wishes of the residents in the town’s policies. However, their views are sometimes contradictory. For example, concerning the program to install photovoltaic power generation systems in private households, some residents will install the system, whereas other residents are either unwilling or financially incapable of installing the system. Therefore, the town as a whole loses the opportunity to benefit the environment despite a strong motivation to do so. By subsidizing residents to install photovoltaic power generation systems, the town is facing financial problems.

There is a positive outlook despite these difficulties. The residents, the town hall, and the town council are actively sharing the promotion of public awareness among residents and the necessary measures to protect the environment; they are making efforts to include environmental improvement in the town’s policy. The current goal is to realize local production and consumption of electric energy. Dissatisfaction and requests from residents stem from the fact that they cannot feel the benefits and advantages of producing electric energy in their town for local consumption. Their concern has been exacerbated by the town’s 4-day blackout after the onset of the East Japan Earthquake last year. However, information about the town’s advanced efforts to produce electricity has spread outside Kuzumaki, making the general public and government agencies believe that Kuzumaki was unaffected by the earthquake. This misunderstanding impeded timely relief operations urgently needed by Kuzumaki.

Separation of power generation and power transmission will boost benefits and advantages, and assure residents that similar misunderstandings can be avoided in the future. There are many obstacles to implementing the separation of power generation and transmission. The first is the current legislative framework for electricity business that may be removed by revising the Electricity Business Act but can only be initiated presently by the national government. This means that legislative actions in the National Diet are required. The second obstacle is weak municipal financial capacity. Even if the Electricity Business Act were revised, it would be extremely difficult for a town with limited financial capabilities to manage separate power generation and transmission systems by running the power transmission business as an independent enterprise of the town. This financial obstacle could be solved by the following strategies: organizing a union with neighboring municipalities under the Local Autonomy Act and running the power transmission business, to use private capital to run the power transmission business as the third sector, or to implement measures to encourage participation of private companies (electric telecommunication carriers, cable television providers, etc.) to run their own power transmission businesses. However, the selection of any one of the strategies leads to another problem, i.e. the development of human resources to maintain, manage, and operate the facilities that will become obsolete or deteriorated in the long run. Presently, manufacturers of power-generating facilities manage the facilities and power companies manage the power transmission facilities. However, once the power generation system is separated from the transmission system, how to secure qualified personnel to run the power generation and transmission systems will become a serious problem.

Furthermore, results of analyzing the example in Kuzumaki suggest that promoting the use of woody biomass and renewable energies requires holistic studies based on theoretical and technological considerations along with practical policies and adequate strategies for capitalizing theories and technologies to benefit the society. Specifically, studies should shed light on the development of human resources and costs required in order to promote the use of woody biomass and renewable energies. Without addressing these considerations, we would not be able to find ideal solutions.

15.3.1 Nanohana Project

Higashiomi city, which is certificated as a biomass town, is located in Shiga prefecture in West Japan. Higashiomi is considered to have the most advanced energy system in Japan; detailed descriptions of the town’s energy system can be found in the publications by Yaguchi (2007, pp. 169–188) and Hirano (2008, pp. 212–221). The resource circulation cycle implemented by the city’s Nanohana (rape blossom) Project covers cultivating rapeseed and extracting oil, consuming rapeseed oil in the region, and collecting used oil, and processing the recovered oil into BDF for fuels in a so-called cascading utilization of rapeseed oil. In addition, the activities of Higashiomi are related to the two main purposes of the revised BNS: “local energy production for local consumption” through “establishment of biomass towns”, and “realization of biomass energy industry.”

However, based on detailed analyses on the city’s resource circulation cycle, Hirano (2008) determined that this circulation system was unrealistic at the time when the analyses were carried out:

The problem lies in the fact that the amount of locally produced rapeseed oil is insufficient to support the intended program. Additionally, the locally produced rapeseed oil is not distributed in the city because the city has established a system for collection of used cooking oil to produce BDF for fuel even before starting rapeseed oil cultivation. This problem seems to be solvable through efforts to enhance local consumption. Furthermore, it is considered not impossible to solve the problem that the amount of locally produced rapeseed oil is small. Hirano (2008) stated the following:

To achieve 100% rapeseed oil self-sufficiency on the premise that rapeseed oil produced in Higashiomi will be consumed in the city, approx. 225 hectares of rapeseed planting area is required. Though it may seem that the required area is significantly large, it is equivalent to only 2% to 3.5% of the city’s current cultivated area. Given the fact that the area used for rapeseed cultivation accounted for 4.1% of the cultivated area in Japan during the peak period, the required area is not so large. If the labor required for rapeseed cultivation is similar to that for the cultivation of wheat (competing crop), the profitability similar to that of wheat is secured (the Subsidy for Production Area Development is granted) and there is a distribution route similar to that of wheat, it seems that securing 300 hectares of rapeseed planting area is not a difficult task.

15.3.2 Rapeseed Cultivation in the Aito Region

The Aito Region in Higashiomi city started testing the growth of rapeseed oil on 0.05 hectares of paddy field that was used for crop rotation in 1998. As the region aimed to be a major production area of rapeseed by receiving subsidies from the government, the planted area increased to 15 ha in 2007 and decreased to 12 ha in 2011. In 2007, rapeseed was cultivated by community farming groups (three in 2009), large-scale individual farmers, and a roadside station farmer. In addition, the nationwide trend of the farmland area used for rapeseed cultivation shows that the average area from 2004 to 2007 was 839 ha (Report on ProductionResults of Local Special Agricultural Products), and it increased to 1690 ha (Statistics on Crop) in 2010 (note: two different statistics are referenced). The smallest planted area during the period 2004–2007 was 774 ha (2005) whereas the largest planted area was 989 ha (2007), with the total harvested area during the period being 665 ha, accounting for only 79% of the planted area.

The economic logic behind the trend of the rapeseed planting area in Higashiomi should be examined. Before the town implemented the rape seed energy program, the rapeseed had been planted in the city by a large-scale individual farmer (hereafter called Farmer O) and community farming groups using different systems. According to Hirano (2008), the cultivated area of Farmer O was 14 ha when the survey was conducted in 2007. The breakdown by crop was 6 ha for paddy rice, 2.5 ha for wheat, 3.6 ha for rapeseed, and 7.55 ha for soybeans. Farmer O employed a 3-year block rotation system to rotate four crops every 3 years in the order of “rice–rice–(wheat–soybean)” or “rice–rice–(rapeseed–soybean)”. The problem is whether it is possible to incorporate rapeseed in this rice-crop rotation farming system. On the other hand, community farming groups do not cultivate soybean as a second crop after cultivating rapeseed and wheat (Hirano, 2008; Himi, 2012).

Table 15.3 shows that the subsidy for rapeseed cultivation under the financial assistance program changes periodically. Based on the double cropping of rapeseed and soybeans, and an expected yield of 100 kg per 10a, the total amount of subsidies granted under various financial assistance programs was 81,700 yen per 10a during the peak period from 2004 to 2005, and decreased considerably to 50,000 yen per 10a in 2009. However, the total subsidy increased to 71,175 yen per 10a in 2011 after rapeseed cultivation became eligible financially to receive subsidies under “Income Compensation Payment for Crop Farmers”, and the “Income Compensation System for Individual Farmers”. Changes in the subsidy amount seem to show a similar trend of producing other types of biomass under “New Agricultural Basic Law”. Nonaka (2009) expects the rapeseed oil biomass business to have a ripple effect on agricultural areas during recessions, and offer employment opportunities to the disabled. Nonetheless, it is considered that assistance from the central government and local governments to the cultivation of rapeseed as a typical resource crop clearly reflects the current trend of biodiesel from rapeseed in Japan.

15.3.3 Comparison of Profitability Between Rapeseed and Wheat Cultivation

Comparison of profitability between rapeseed and wheat cultivations was carried out for 2004 when the largest subsidy was offered for rapeseed cultivation under the financial assistance programs, and for 2010 when the subsidy was the smallest. The results are listed in Table 15.4. As shown in the “References” section in the table, the data used in the table were collected from various sources. Hence, the data must be checked for whether they match the above estimates and can account for the actual trend of the area used for rapeseed cultivation. The estimates were made on the premise that the planting system does not affect the yield and expenses. Two key points, i.e. whether the profit is positive or whether it is higher than that for wheat, need to be considered when evaluating the profitability for rapeseed cultivation.

Based on double cropping of rapeseed and soybean, the total income from rapeseed cultivation in 2004 was approximately 92,000 yen per 10a that included 10,100 yen per 10a from sales and 81,817 yen per 10a from subsidies. The production cost (including labor cost) was 40,000 yen/10 ha using the data estimated by Hirano (2008) because no other statistical data on the cost of rapeseed production in 2004 were available. Fujii and Kawamura (2005) and Fujiki and Awaji (2006) showed production costs of 35,485 and 34,348 yen per 10a respectively. The production costs reported by Fujii and Kawamura did not include the depreciation costs for farm machines owned by farmers such as drying machines and tractors, and hence their results underestimated the true total cost. Therefore, Hirano set the production cost at 40,000 yen per 10a that is slightly higher than the production costs shown above. In this way, a profit of approximately 52,000 yen per 10a, shown as Profit I, is generated from rapeseed cultivation. However, as mentioned above, a comparison of profitability between rapeseed cultivation and wheat cultivation can be made between the cropping seasons for both crops that are complementary to each other. When the sum of the sales revenue for wheat cultivation (39,812 yen) and the Subsidy for Production Area Development (40,000 yen) is approximately 80,000 yen per 10a, the production cost is approximately 46,000 yen per 10a in 2004, and Profit I is approximately 33,500 yen per 10a. So, rapeseed cultivation has a higher profit of approximately 18,500 yen per 10a than wheat cultivation.

If the community farming groups do not cultivate soybean as a second crop after cultivating rapeseed, a comparison should be made between single cropping of rapeseed and wheat. In this case, the amounts of the Subsidy for Production Area Development for rapeseed cultivation and wheat cultivation decreased to 20,000 and 35,000 yen per 10a respectively, hence Profit II for rapeseed cultivation and wheat cultivation also decreases to 32,000 yen per 10a and 28,500 yen per 10a respectively. However, rapeseed cultivation has positive profit that is higher than wheat cultivation for both single cropping and double cropping.

15.3.4 Further Analyses of Profitability: The Case of Change in Labor Cost or Subsidy

If the rapeseed production cost shown by Hirano is further examined in detail, the labor cost of 7950 yen (7.95 hours) with an hourly rate of 1000 yen per hour needs to be checked to find whether it is reasonable. According to the “Wage Survey of Outdoor Workers by Occupation”, the average wage of light laborers (men and women) in Shiga in 2000 was 12,220 yen/7.5 hours that represents an hourly wage of 1629 yen. The labor cost for rapeseed production is estimated to be 12,951 yen per 10a (1,629 yen × 7.95 hours); it is higher than that estimated by Hirano by 5000 yen per 10a when the calculation is based on the above figures. The labor cost was estimated for unskilled labor, which is the realistic labor cost if it is calculated using the wages for complex labor by taking into account the fact that cities in this region are characterized by an abundance of off-farm employment opportunities (“Kinki-type Regional Labor Market” (Yamazaki, 1996)). Though the wages for complex labor vary depending on gender, age, occupation, and size of business, the hourly wage is estimated to be 2778 yen per hour based on the total wages for complex labor of 5 million yen per year divided by the average annual working hours in Japan (1800 hours). The labor cost for rapeseed oil production is thus estimated to be 22,085 yen per 10a (2778 yen × 7.95 hours); it is higher than Hirano’s estimation by 14,000 yen per 10a. If the wages that serve as the basis for the calculation of labor cost are changed accordingly, the resulting labor cost should be higher. As shown in Table 15.5, the profit naturally decreases when the labor cost increases, but it was still positive in 2004.

The area used for rapeseed cultivation expanded in response to the relatively high profit for rapeseed cultivation during the period when solid financial subsidies were offered to rapeseed cultivation by central and local governments.

Table 15.4 shows that the amount of sales revenue for rapeseed cultivation in 2010 was approximately 15,000 yen per 10a. Because there were no subsidies granted to single cropping of rapeseed from central government, the total revenue is estimated to be 65,000 yen when calculated by adding the subsidy under the Project for Self-sufficiency Improvement in Field Applications (35,000 yen per 10a) and the Subsidy for Rapeseed Cultivation from the city (15,000 yen per 10a) to the sales revenue based on double cropping of rapeseed and soybeans. Profit I is estimated to be 28,000 yen per 10a when calculated by subtracting the cost of 37,000 yen per 10a based on the section “Production Cost of Rapeseed” in the survey known as “Production Cost of Rapeseed and Buckwheat” from the total revenue. Profit I is lower than the level of 2004 by approximately 24,000 yen per 10a but is still positive. On the other hand, Profit I for wheat cultivation is estimated to be 30,500 yen per 10a when calculated by subtracting the cost of 36,100 yen per 10a from approximately 66,600 yen per 10a, which is the sum of the sales revenue of wheat cultivation (16,600 yen) and the subsidy under the Project for Self-sufficiency Improvement in Field Applications (50,000 yen). Thus, the profit for wheat cultivation was slightly higher than that for rapeseed cultivation by approximately 2400 yen per 10a in 2010. This means the relationship between the profit for wheat cultivation and that for rapeseed cultivation becomes almost balanced, or the trend was reversed as compared with the profits in 2004.

When single cropping of rapeseed and single cropping of wheat are compared, the subsidies under the Project for Self-sufficiency Improvement in Field Applications for rapeseed cultivation and wheat cultivation decrease to 20,000 and 35,000 yen per 10a respectively. Then, Profit II for rapeseed cultivation and for wheat cultivation is estimated to be 13,000 and 15,500 yen per 10a respectively. In this case, the profit for rapeseed cultivation remains positive and the profits for rapeseed cultivation and for wheat cultivation are almost balanced or reversed when compared with the profits in 2004.

If labor costs are estimated differently from those for 2004 (see Table 15.5), Profit I based on double cropping of rapeseed and wheat is positive whereas Profit II based on single cropping of rapeseed remains positive at 8000 yen per 10a if the labor cost is calculated using the wages for unskilled labor; the profit becomes −770 yen per 10a when the labor cost is calculated using the wages for complex labor.

Himi (2012) introduced the status of rapeseed cultivation by one of the community farming groups in Higashiomi city (hereafter called Agricultural Cooperative S). Agricultural Cooperative S is a specific agricultural organization with 17 hectares of cultivated area and 31 participating farmers. Its predecessor was a community farming cooperative established in 1980 with the objective of promoting group utilization of farm machines, group crop rotation, and improvement of efficiency through cooperative work. Agricultural Cooperative S cultivated wheat on 10 hectares and rapeseed on 7 hectares in 2010. However, as for rapeseed cultivation, there was almost no difference between its expenditure and income that includes subsidies. Thus, the Agricultural Cooperative plans to stop cultivating rapeseed. The observations made by Himi seem to match the calculation results shown in Table 15.5. As mentioned above, the total amount of subsidies increased for the first time in 2011. Attention will be paid to how this will affect the trend of the rapeseed planting area in the future.